Brazil’s leading cryptocurrency and fintech industry groups have warned that extending a financial transaction tax to stablecoin operations could harm innovation and violate existing law.
In a joint statement shared with CoinDesk, industry associations ABcripto, ABFintechs, Abracam, ABToken and Zetta said recent discussions about extending a financial operations tax (known locally as Imposto sobre Operações Financeiras, or IOF) to stablecoin transactions raise legal and economic concerns.
The organizations represent more than 850 companies in Brazil’s financial technology, virtual assets and market infrastructure sectors, the statement said.
The debate concerns a levy applied to certain financial transactions, including foreign exchange transactions. According to the associations, applying the tax to stablecoin transactions would contradict Brazil’s current legal framework and would harm the country’s crypto industry.
They argue that the Constitution defines IOF as applying only to the settlement of foreign exchange transactions involving the delivery of domestic or foreign fiat currency. Stablecoins, they said, do not meet this definition.
Brazil’s Virtual Assets Law, enacted as Law No. 14,478 in 2022, explicitly states that virtual assets are not considered domestic or foreign fiat currency, the statement said. Industry groups say this distinction means stablecoins cannot legally be treated as instruments representing foreign currencies under IOF rules.
As a result, the organizations believe that any attempt to extend the tax through an executive order or administrative rule would be illegal. Under Brazil’s constitutional framework, new taxes or expanded tax triggers must be approved through the legislative process.
“In this context, any expansion of the tax incidence on operations with stablecoins through an executive order or administrative rule is unlawful, as acts of this nature cannot create or expand a tax triggering event,” the document states.
The groups also warned of confusion between Brazil’s central bank’s supervisory rules and tax policy. They said monitoring digital asset transactions does not automatically justify applying the IOF tax to these activities.
Industry representatives say policy mistakes could harm a rapidly expanding sector. Brazil has become one of the largest crypto markets in the world, with around 25 million people participating in the ecosystem.
Stablecoin Adoption in Brazil
The associations said the country’s crypto sector has grown alongside a broader wave of financial innovation, including fintech platforms, digital payments and blockchain infrastructure. They also noted that similar taxes on stablecoin transactions are not widely used in other major economies.
Stablecoin usage in Brazil has grown significantly in recent years, making the country one of the largest asset markets in Latin America and the world.
Dollar-pegged tokens, like Tether’s USDT and Circle’s USDC, now dominate crypto activity as Brazilians use them to hedge the volatility of their fiat currency, the real (BRL), move money across borders cheaply, and provide liquidity for trades.
The Brazilian crypto market, according to an auditor at the Brazilian tax authority, Receita Federal, moves between $6 billion and $8 billion per month, 90% of which is stablecoin flows.
Not all are US dollar stablecoins, as BRL-pegged stablecoins are gaining ground. Token trading tied to the Brazilian real reached around $906 million in the first half of 2025, according to Dune data.
